Gain Access To CX & Retail Ideas

With a PSFK Pro Membership you'll enjoy unabridged access to our reports, newsletters, events and our database all which include best-in-class examples compiled from an assortment of brands, businesses, vendors and experts.

Interview: How CVS Is Making Healthy Living Accessible To More Consumers, Part 2

2 October, 2018

Piers Fawkes, PSFK

In Brief

From going the extra mile to cut prescription costs and creating easy-to-understand iconographic labels to offering new beauty services for in-store customers, CVS is revamping its brand strategy to better cater to modern health needs

As consumer behavior surrounding healthcare continues to evolve, brands in the health and wellness space are transforming their business strategies to keep up. Considering issues like skyrocketing healthcare costs, difficult-to-understand medications, new balances between in-store and digital services and increased consumer interest in self-care, retailers like CVS are researching and actualizing how to best meet modern customer needs.

Just before taking the stage at this year’s edition of Shop.org, Kevin Hourican, EVP of CVS Health and president of CVS Pharmacy, sat down with PSFK founder Piers Fawkes for a conversation on how the pharmacy chain plans to stay ahead of the curve in health and wellness offerings.

Piers Fawkes: How are you tackling issues like rising healthcare costs? How is that impacting the work that you do?

Kevin: At CVS Pharmacy, we’ve seen in the data that one of the reasons why people don’t start taking their medication is they can’t afford them. The rising cost of healthcare in this country is a big problem, and likewise the rising cost of pharmacy drugs.

There is no one else in this space right now who is proactively, and on the consumer’s behalf, taking action to help save the patient money.

We built a proprietary tool that’s called the Pharmacy Savings Finder that allows our technicians and pharmacists in our stores to navigate the complicated healthcare landscape to find ways to save a customer money.

We provide it for free and we’re doing this proactively, and we’re going to launch a commercial this fall that tells consumers about this capability.

How did you arrive at your insight into the consumer need for more cost-efficient care?

The insight came to us in a very clear way. I visit hundreds of stores per year, thousands of them over time. We were in a store in a lower-income trade area. The pharmacy was having a hard time getting customers to pick up their medications, and it was obvious why.

Customers couldn’t afford them. This unbelievable pharmacist we met at this store was doing all kinds of things manually to save his customers money. What he proved was that if the medication cost more than $50, there was no chance customers would pick it up in his store.

My and my team’s responsibility is to build tools to make it easier to reduce costs everywhere. This software tool that we’ve built is powered by data that we can use as a resource for creating products like generic substitutions. Sometimes there is not a generic available—then we can look for therapeutic alternatives.

The average pharmacy actually doesn’t know what therapeutic alternatives are available. We know this because we own a pharmacy benefits manager called Caremark. We know what CVS Pharmacy can find clinical matches for drugs and that we can substitute for a customer if the other is less expensive.

We actually work directly with the doctors to do that. Also. if there are coupons available in the industry, we will navigate across the labyrinth of coupons to find the ones that help customers save money. If none of those options work, we look for alternative ways to reduce costs.

Some organizations tap into Silicon Valley for the next big thing, but it sounds like you were there in the field listening to consumers. Where’s the best place to find new business ideas?

I would respectfully admit that both matter, but the majority of our best programs start with concrete customer needs, and the best way to find out what those needs are is to be out in the stores talking to customers and talking to our front‑line, which is our pharmacy technicians and our front‑store cashiers.

This barrier of cost was a real problem, and we built a proprietary tool that’s one of its kind that can help in a meaningful way.

What other challenges is CVS Pharmacy trying to address?

Another barrier was confusion about when, where or how to take medication. Pharmacy labels were hard to read. We wanted a simpler solution, so we created an iconography‑based label. A rising sun means take the medication in the morning; a moon means take it at night.

We made it very crisp and clear. On the right hand side of the label there is a schedule to help people, as there are millions of drug‑on‑drug combinations and some drugs can be taken together, some can’t. Some can be taken with food, some can’t. Some are best taken at night, some are best taken in the morning.

This tool synchronizes all of that complexity into a simple program. In addition, we add the power of the human touch—a pharmacist at the local store who will take the time to talk with you about it and ask you questions.

It seems that the human element is critical.

It’s absolutely critical. It’s powered by technology. We believe both matter. We have that powerful human local connection. We believe healthcare is local, and to be very clear, we know that technology is an enabler of improved frictionless interactions.

What are some areas you wish to improve upon?

What we want some help with is, how do we become more agile? How do we move faster?

That’s the role of smaller companies. Perhaps a smaller company can help us solve unmet patient needs or address a consumer pain point. We don’t need to build everything ourselves. We happen to build these two things ourselves because we believe they are differentiated in the core of what we do.

For instance, we have an app that is good, but I’d like it to be great. Perhaps there are players, small ones, that could help us be more agile. Maybe their expertise is user experience through an app, and they can bring that expertise, and then we can combine it with our healthcare expertise.

Can you touch a little more on when you decide to partner, when you don’t?

If it’s the absolute core of what our business is, that would be something we would want to build ourselves. If it’s truly differentiating, we would want to build it ourselves.

If it is helping advance something that we have to make it better, that would be a great example of a partnership. If there is a company that could help us improve the satisfaction of the app experience through their know‑how, that’d be a great example of partnering with us.

When it comes to delivery, does sending products to people’s homes compete with driving in-store traffic? Does at-home delivery pose danger?

Even more dangerous would be not providing the consumer the services that they want and that they need. For many customers, our stores are a very convenient place for them to shop and they come into our stores every week to buy things. People said the same thing about drive‑through pharmacies.

Why would you want to put a drive-through on the outside of the pharmacy? Customers are not going come in. We’ve proven and we know that if you improve the convenience of your service and your product that customers actually come to you more frequently and they reward you with your business. We have thousands of drive‑through locations, as an example.

We don’t believe that consumers are going to want everything delivered to their home. It could be that they like coming into the store. Maybe a mom with a sick child doesn’t want to have to put the child into a car seat or go out to the store and wait in line. She wants that discreet item of Pedialyte delivered to the home quickly, within an hour.

We’re doing nationwide delivery. When customers say, “I’d like Pedialyte,” we give you our tools and suggest other things that would be appropriate and relevant.

How does that tie into your loyalty program?

We have the industry’s largest loyalty program. It’s called “ExtraCare” and has over 60 million members. We have a lot of information about what our consumers buy. When we do this well, we believe that we can actually increase consumers’ interactions with us. What I see as a trend is people consolidating their purchases into fewer and fewer retailers.

I believe if we don’t offer convenient services like delivery, we’ll be on the outside. If we can have an app that suggests things that go along with what customers need, pharmacy to front, front to pharmacy, we can grow our basket with our credits.

What about in-store—how are you creating a compelling experience?

I could not agree more that creating a compelling place to shop is an imperative in retail. There’s the expression, “Retail is not dead. Bad retail is dead.” We must have a compelling in‑store environment that gives a reason for people to want to come to the store.

I’ve been in retail for a couple of decades now. I’ve clearly learned that in my career. A good example of what we’re doing in that regard to create some theater and fun, like what we’re doing with beauty. We have the second largest beauty business in America.

Some people know that. Many don’t and are surprised. We want to make our beauty department even more fun. We have a pilot right now in five stores in the country. It’s called “Beauty in Real Life.” It is an elevated, exciting theater-driven experience. We’re going to get some things wrong there.

We’re going to get a lot right, new brands, new products, services. We’ve partnered with a start‑up called “Glamsquad,” which focuses on servicing a millennial customer in an Internet, social-media way. Glamsquad is going to do events to bring customers into our stores.

Customers can book appointments online. People show up to have their hair blown out, nails done and things of that nature. We know we need theater. In our store, health and beauty is the focus of our store.

How do health and beauty serve as parallels?

The health part of our store is about helping people when they’re not feeling well and what we call self‑care. More and more people are taking products to help them relax and sleep or for their stomach and things of that nature. As for beauty, we believe that how people look impacts how they feel.

How they feel impacts their health. These two businesses are actually inextricably linked. We want a beauty experience that is exciting and fun.

We think there can be over 500 of those stores that I just mentioned with the elevated beauty experience. This five‑store pilot that we’re in is about getting it right. We’re going to rapidly expand that out to other parts of the country.

Using consumer insight to inform brand strategy in the health and wellness space is just one way that retailers are better serving customers and driving sales. For more about how companies like CVS are evolving for the future of health and wellness needs, see PSFK’s Retail Health & Wellness Debrief.

As consumer behavior surrounding healthcare continues to evolve, brands in the health and wellness space are transforming their business strategies to keep up. Considering issues like skyrocketing healthcare costs, difficult-to-understand medications, new balances between in-store and digital services and increased consumer interest in self-care, retailers like CVS are researching and actualizing how to best meet modern customer needs.

Just before taking the stage at this year’s edition of Shop.org, Kevin Hourican, EVP of CVS Health and president of CVS Pharmacy, sat down with PSFK founder Piers Fawkes for a conversation on how the pharmacy chain plans to stay ahead of the curve in health and wellness offerings.